Bitcoin Price: hypothesis of a 50% increase

There is a hypothesis circulating regarding the trend of the Bitcoin price in the coming months that predicts a 50% increase.

This hypothesis is based on the analysis of the historical trend, and in particular on the repetition of a pattern that in the past has indeed led to increases of 50%.

If this pattern were to repeat itself this year as well, the price of BTC could be headed towards $150,000.

The historical pattern of Bitcoin price

The key to identifying this pattern is the simultaneity of three events occurring in the USA: a low financial leverage, retail sales higher than expected, and aggressive signals from the central bank on monetary policy.

These are data concerning the economy and finance of the USA, and are linked to parameters such as price inflation, interest rates, and the level of leverage in speculative markets.

In the past, there are at least three similar situations, one in July 2021, a second at the beginning of 2023, and the last at the beginning of 2024, and every time this situation has led to price increases of Bitcoin exceeding 50%.

In July 2021, a rise began that was equal to 76%, while at the beginning of 2023 it was slightly above 50%. At the beginning of 2024, it was even above 80%.

Will the past happen again?

In July 2021 the annualized funding rate of Bitcoin was very low (almost 0%), with retail sales data in the USA better than expected. Additionally, a speech by the president of the Fed at the economic symposium in Jackson Hole, in August, led the markets to consider a reduction of QE possible.

So both of the above conditions occurred. The price of Bitcoin from July to September recorded a strong increase, creating this pattern.

Even in January 2023, the annualized funding rate of Bitcoin was low, although well above 0%. Additionally, retail sales data in the USA were better than expected, and the Fed chairman suggested a more restrictive monetary policy to counter inflation during a speech at the Sveriges Riksbank.

In this case as well, all three typical conditions of this pattern occurred, and the price of BTC ended up increasing significantly.

Finally, in January 2024, the annualized funding rate of future perpetui was low (4%), and retail sales data in the USA exceeded market expectations. Additionally, the Fed president revealed that the central bank would not cut interest rates, thus maintaining the restrictive monetary policy.

The current situation

Currently, the annualized funding rate of perpetual futures on Bitcoin is in line with that of January 2024, if not even lower.

Furthermore, in March, the monthly retail sales in the USA were slightly above expectations, but much higher than the average of the previous twelve months. However, it should be noted that this single March data was influenced by the implementation of the tariffs, which led many Americans to concentrate in March purchases they had planned to make in the following months. In fact, it is expected that in April there will be a sharp decline, but this very pessimistic forecast could lead to actual results better than expected.

The real problem is the monetary policy of the Fed, because for the occurrence of the pattern mentioned above, negative signals in that sense would be needed.

Instead, the markets are already widely anticipating that the Federal Reserve will not cut rates in May, even though there is beginning to be consensus around a hypothetical cut in June.

Therefore, it seems difficult for the markets to be surprised in the short term by more negative signals than expected, also because at this moment it seems absurd to imagine that the Fed could increase rates in May.

However, in the event that during the press conference on May 7 Powell should indicate that they do not intend to cut rates in June, as instead expected by the market, the third condition could also occur.

The forecast on the price of Bitcoin

To tell the truth, it is not at all certain that if all three conditions of this pattern were to occur again, the price of BTC must necessarily rise significantly.

In fact, the trend of Bitcoin’s price actually does not depend on those three conditions, and generally, in the medium/long term, it tends to inversely follow the trend of the Dollar Index (DXY).

However, it remains absolutely possible that in the medium-short term things will go exactly like this, also because thanks to a particularly low DXY in recent weeks, BTC has shown clear signs of notable strength, interrupting the decline that began in February.

Probably the potential occurrence of the pattern in question during this period could act as a trigger for a rebound actually caused by a particularly weak dollar, especially if such weakness were to intensify during, for example, the month of May.